After years of pressure from the housing market’s supply-and-demand imbalance, California’s housing crisis has reached a breaking point.

California is currently experiencing a major inventory shortage, especially for low- to medium- income earners looking to purchase their very first home. Homebuyers are forced to navigate a volatile housing market, which contributes to our state’s low homeownership rate.

The effects of this imbalanced market can also be seen in our growing homelessness crisis. The increasing population of unhoused individuals has become such a statewide concern that Governor Newson recently proposed a $100 billion investment in a California Comeback Plan to create more housing units to place unhoused people.

One remedy for this current housing shortage is easing zoning rules to increase residential construction. However, construction levels have been below historical norms for the past decade. A panel of 100+ experts and economists voted that the top three most effective ways to increase housing are to:

  • loosen zoning rules;
  • ease the land subdivision process for landowners, and
  • relax local review regulations for large housing developments, according to Zillow.

Without these changes, Zillow’s panel of experts forecasts that home prices will continue to rise, pushing many would-be first-time homebuyers out of homeownership.

2021 Zoning Changes

Fortunately, zoning is gradually loosening in California. California lawmakers are taking steps towards more affordable housing, especially for low- and moderate-income households. These new laws aim to change and ultimately improve the way housing is implemented and managed. Two bills significant to California’s housing market were passed in June-July 2021, including:

  • AB 832, which was passed to enact the Rental Housing Recovery Act, extending a temporary moratorium on the eviction of residential tenants for the nonpayment of rent that became delinquent between March 1, 2020 and September 30, 2021 due to the tenant’s coronavirus (COVID-19)-related financial distress; and
  • AB 306, which was passed to reduce permitting requirements for the construction of housing intended for school district employees, including teachers.

Visit our Legislative gossip page for a list of laws relevant to housing or real estate practice introduced or passed during the current legislative season.

But there is still more to be done. Without these essential zoning changes, the housing crisis will continue to worsen, and California’s low homeownership rate will continue. This reduced transaction volume is especially harmful for the incomes of brokers and agents.

However, the community can make a difference simply by getting involved. With a unique view into the housing needs of their community, real estate professionals can attend local city council meetings or contact their local representatives to advocate for more housing.

When legislators can continue to effectively and quickly reform zoning codes, construction will increase, boosting inventory and allowing more potential homebuyers to qualify to buy.